Labour Court Database __________________________________________________________________________________ File Number: CD95279 Case Number: LCR14759 Section / Act: S26(1) Parties: LISADELL TOWELS LTD (IBEC) - and - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION |
Re-hearing arising from LCR14569.
Recommendation:
The Court has given careful consideration to the submissions and
has also considered developments in this dispute subsequent to the
issue of LCR14569.
The Court notes that the Company accepted that recommendation and
the Union rejected same.
The Court is still satisfied that if the Company is to return to
viability, urgent action is needed. It is also of the view that
the terms of LCR14569 gave the parties the opportunity to process
the dispute.
In the light of recent developments the Court recommends that both
parties accept that the document titled Appendix 11 and 11(a) in
the Company's submission to the Court forms a reasonable basis for
negotiating the savings required.
The Court envisages that negotiations of the phasing in of the
P.C.W. should form part of the negotiations on the savings.
The Court urges both parties to accept the above recommendation.
Division: Ms Owens Mr McHenry Ms Ni Mhurchu
Text of Document__________________________________________________________________
CD95279 RECOMMENDATION NO. LCR14759
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
PARTIES: LISADELL TOWELS LTD
and
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
SUBJECT:
1. Re-hearing arising from LCR14569.
BACKGROUND:
2. 1. The Company is involved in the manufacture of towels,
mainly for the hotel trade. It is based in
Carrickmacross and employs approximately 150 workers.
2. The Union is seeking the first and second phase of the
Programme for Competitiveness and Work (P.C.W.) with
immediate effect. The Company has experienced financial
difficulties over the past number of years. The first
phase of the PCW was due on 9th April, 1994 but the
Company has claimed inability to pay the increase. The
Company's position is that it is looking for a 10% pay
reduction to be applied to all employees. This would
give the Company the necessary savings to enable it to
survive.
3. The dispute was first referred to the Labour Court on
the 30th August, 1994 (LCR14569 refers). The Court
recommended that "payment of the P.C.W. be postponed and
that the parties have urgent negotiations on how the
savings required by the Company could be achieved." If
no agreement was reached the claim was to be referred
back to the Court for a decision. The Company accepted
the Court's recommendation but the Union rejected it.
The Union imposed an overtime ban and also served strike
notice on the Company. The strike notice was withdrawn
following the intervention of the Labour Relations
Commission. At conciliation the Company put forward
proposals to achieve the necessary savings. The main
proposals were:-
(a) Pay-freeze for further 2 years.
(b) 2 extra floating days annual leave.
(c) Reduction in overtime rates.
(d) Elimination of service-pay.
(e) 2 redundancies.
(f) World Class Manufacturing.
(g) Average bonus in weaving shed to be
eliminated.
(h) 40 hour week in winter and 39 hours in summer.
4. The Union would only consider (b), (c) and (e) and could
not come up with any alternative suggestions for the
savings. The Company regarded the Union's response as
unacceptable.
Further conciliation conferences failed to resolve the
dispute. The Union's final position which it asked the
Company to consider was as follows:-
(i) 2 worker directors.
(ii) Shares to be given to the workers in return
for savings.
(iii) Employees to be kept up to date on all
future developments.
(iv) Some structure to be agreed to return part
of any savings/profits to the workers in the
form of a wage increase.
(v) On the basis of the above being accepted by
both sides, a list of savings to be drawn up
which would help to return the Company to
viability.
(vi) Involvement of Union experts in the above
process, as necessary.
5. The Union's proposals were put to the Board of the
Company. It rejected (i), agreed to (ii) when normal
profit levels are achieved and agreed to (iii), (iv) and
(vi). With regard to (v) the Board stated that it was
"reassured that the Union would confirm that savings
needed should be specified from the lists already
available or from any additional proposals by the
Union."
6. On the 27th April, 1995, the Union stated that the
Company's response to its proposals had been rejected by
its members. Both sides requested that the dispute be
referred back to the Labour Court for a definitive
recommendation. The Court heard the claim on 8th May,
1995.
UNION'S ARGUMENTS:
3. 1. The Company has made it difficult to create a good
industrial relations environment because of its
continuing policy of refusing to pay the first and
second phase of the Programme for Competitiveness and
Work.
2. The Company has acknowledged the workers' contribution
to the survival plan in 1993, which resulted in
substantial savings to the Company.
3. The workers refuse to make any concessions to the
Company which will result in a cut in their wages and
also change the conditions of their employment.
4. The members of the Union have no faith in the Board of
the Company with regard to handling investments and
their general running of the Company. The Company
continues to make the case that it is very near to
insolvency. The Union does not accept this. If it is
the case then any contribution made by our members will
make no difference to the overall financial position of
the Company.
COMPANY'S ARGUMENTS:
4. 1. While conceding that there is a need to dramatically
reduce the Company's costs, the workers have refused to
negotiate on any cost saving measures. The Company's
position is that it must make savings of #250,000 to
remain viable.
2. A comparison of the Company's costs in relation to its
major European competitors is as follows:-
(a) The Company's payroll costs as a percentage of
sales value are higher.
(b) Its capital investment is lower.
(c) Its turnover per employee is lower.
In April, 1995, the Company indicated to the Union that
if the notice for industrial action was lifted that the
requirement for a 10% direct wage cut would not go
ahead. If other means can be found and agreed on
achieving the saving of #250,000, then the PCW would be
paid on a phased basis. However, it is extremely
difficult to make the savings required without some pay
cut.
3. All the arguments that were made at the previous Court
hearing regarding competition from low cost countries,
the increasing price of raw materials and an inability
to recoup higher costs through increased prices to
customers still remain. In addition, order intake for
the past 4 months has been low, resulting in short time
working.
4. Although audited accounts are not available at present,
it is forecast the Company's operation will make a loss
of #34,000 for the financial year 1994/1995. The losses
forecast in next year's budget amount to #115,000 and
this does not include any provision for the payment of
the PCW. The Banks agreed a moratorium on principal
repayments to the end of the Company's financial year
1994/1995. However, they are insisting on payments or
as an alternative are demanding an equity injection into
the Company. To achieve this the Company requires a
competitive cost structure and profits to encourage an
investor. A list of the options (appendix 11, and 11A
of the Company's submission refers) on how to achieve
the necessary savings has been submitted to the Union
for consideration. The Company is open to any
suggestions from the Union and all employees as to how
the savings can be achieved.
RECOMMENDATION:
The Court has given careful consideration to the submissions and
has also considered developments in this dispute subsequent to the
issue of LCR14569.
The Court notes that the Company accepted that recommendation and
the Union rejected same.
The Court is still satisfied that if the Company is to return to
viability, urgent action is needed. It is also of the view that
the terms of LCR14569 gave the parties the opportunity to process
the dispute.
In the light of recent developments the Court recommends that both
parties accept that the document titled Appendix 11 and 11(a) in
the Company's submission to the Court forms a reasonable basis for
negotiating the savings required.
The Court envisages that negotiations of the phasing in of the
P.C.W. should form part of the negotiations on the savings.
The Court urges both parties to accept the above recommendation.
~
Signed on behalf of the Labour Court
Evelyn Owens
30th May, 1995 -------------
L.W./U.S. Chairman
NOTE:
ENQUIRIES CONCERNING THIS RECOMMENDATION SHOULD BE ADDRESSED TO MR
LARRY WISELY, COURT SECRETARY.